The Teagasc Economic Outlook Conference in Kilkenny, 2012 will take place against a background of a further increase in farm incomes in 2011. The latest provisional figures from the CSO, just released, estimates income in the agriculture sector increased by 33% in 2011, compared to 2010. Higher spending on inputs was more than offset by increases in output prices for farm produce.
The other main factor influencing the CSO income figure was the receipt of some subsidy payments in 2011 which had been held over from 2010. Taking account of this payment delay, Teagasc estimates that the actual increase in income earned in the sector in 2011 is closer to 20 percent.
At the Teagasc conference in January 2012, a review of the current situation for each enterprise and the outlook for the coming year will be presented. The value of milk output has increased by 20 per cent, largely reflecting the increase in milk price in 2011, but also an increase in the volume of milk sales. Beef output value is estimated to have risen 17%, mainly reflecting an increase in beef prices. Pig output value is estimated to have increased 16% due to higher prices and an increase in pigmeat production. Sheep output value is estimated to have increased by 9% largely due to higher prices. The value of cereal production is estimated to have increased by 52%, reflecting an increase in the area planted, higher yields and higher prices in 2011.
However the story on the input side is also one of increased prices. Feed expenditure is estimated to have increased 22%, due exclusively to higher prices. A steep increase in fertiliser prices in 2011 was partially offset by a reduction in fertiliser usage. Fertiliser expenditure is estimated to be up 10% in 2011. Energy expenditure was up 17% percent, mainly due to higher diesel prices in 2011.
The other key factor influencing the farm income estimate for 2011 relates to the timing of receipt of some subsidy payments. Some payments which were due to be paid in 2010 were delayed and not paid until 2011. For statistical reasons these delayed payments must form part of the 2011 income calculation. This lowered the income figure for 2010, increased the income figure for 2011 and inflated the overall increase in agricultural income in 2011. Making a correction to account for this payment timing issue, Teagasc estimates that the actual increase in incomes in 2011 over those in 2010 is closer to 20 percent.
Teagasc economists point out that this CSO estimate is an aggregate income measure, which reflects the average level of increase in income that will have been experienced across the agricultural sector as a whole. They say that it is important to remember that there will be considerable variation in the income story across farm types, depending on the enterprises individual farms are engaged in.